{"id":203225,"date":"2021-03-05T12:39:12","date_gmt":"2021-03-04T23:39:12","guid":{"rendered":"https:\/\/legalvision.co.nz\/?p=203225"},"modified":"2021-03-19T09:43:28","modified_gmt":"2021-03-18T20:43:28","slug":"exercise-right-of-renewal","status":"publish","type":"post","link":"https:\/\/legalvision.co.nz\/property-and-leasing\/exercise-right-of-renewal\/","title":{"rendered":"What Happens if I Do Not Exercise my Right of Renewal in NZ?"},"content":{"rendered":"<p><span style=\"font-weight: 400\">As a <\/span><a href=\"https:\/\/legalvision.co.nz\/property-and-leasing\/what-are-my-rights-as-commercial-tenant\/\"><span style=\"font-weight: 400\">commercial tenant<\/span><\/a><span style=\"font-weight: 400\">, a longer term lease can be extremely beneficial. It provides your business with security as to your location and helps in maintaining a strong, local customer base. However, due to an array of reasons, you may not renew your lease by exercising your right of renewal. This article will outline what:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">a right of renewal is; and<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">can occur if you choose or fail to renew your right of renewal.<\/span><\/li>\n<\/ul>\n<h2><span style=\"font-weight: 400\">What is a Right of Renewal?<\/span><\/h2>\n<p><span style=\"font-weight: 400\">Most commercial leases contain a right of renewal clause. This clause provides you with the right to enter into a new lease with your landlord when your initial term or current tenancy is coming to an end. Lease renewal differs from extending the term of your existing lease as you and your landlord are entering into a new <\/span><a href=\"https:\/\/legalvision.co.nz\/property-and-leasing\/agreement-to-lease\/\"><span style=\"font-weight: 400\">lease agreement<\/span><\/a><span style=\"font-weight: 400\">. To exercise your right of renewal, you must follow the procedure and abide by the pre-conditions set out in the right of renewal clause.<\/span><\/p>\n<div class=\"box box--info box--icon\">\n<p><span style=\"font-weight: 400\">For example, most right of renewal clauses will:<\/span><\/p>\n<ul>\n<li><span style=\"font-weight: 400\">detail pre-conditions that you must meet to exercise your right. You likely will forfeit your right of renewal if you have breached the terms of your lease;&nbsp;<\/span><\/li>\n<li><span style=\"font-weight: 400\">require you to provide your landlord with written notice that you are renewing your lease; and<\/span><\/li>\n<li><span style=\"font-weight: 400\">set out a time period in which you must provide notice. For example, you may have to give your landlord notice three months before the end of your lease term.<\/span><\/li>\n<\/ul>\n<\/div>\n<p><span style=\"font-weight: 400\">If you have abided by the procedure and pre-conditions specified in your lease, your landlord cannot refuse to grant your business a new lease. Once your landlord has accepted your renewal notice, it is common practice to enter into a deed of renewal. Your business is formally granted your new lease upon entering into the deed of renewal.<\/span><\/p>\n<p><span style=\"font-weight: 400\">However, there may be situations where you do not exercise your right of renewal. You may choose not to renew your lease, or fail to properly exercise your right of renewal. In such circumstances:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">you can seek relief from the Court to order a renewal of your lease;<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">you can argue that your lease was renewed by implication;<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">your landlord may argue that your lease was renewed by implication; or<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">your lease will become a statutory tenancy.<\/span><\/li>\n<\/ul>\n<h2><span style=\"font-weight: 400\">Relief From the Court<\/span><\/h2>\n<p><span style=\"font-weight: 400\">You may be able to get relief from the courts if the reason that your lease was not renewed was that your landlord:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">failed to remind you that your lease was due for renewal; or<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">refused to renew your lease on the basis that you breached your lease or failed to follow the prescribed procedure.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400\">In such circumstances, the court can exercise its discretion and order your landlord to renew your lease. This outcome is likely to occur if:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">your landlord failed to give you a clear opportunity to renew your lease by reminding you of your renewal option;<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">your breach of the lease was relatively trivial; or&nbsp;<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">you made a simple mistake as to the procedure for giving notice of renewal.&nbsp;<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400\">However, going to court can be an expensive and time-consuming process. If you do wish to renew your lease, it is best practice to comply with the procedure and pre-conditions outlined in your lease agreement. It may be useful to mark in your business\u2019s calendar when your lease is up for renewal. This step will ensure that you do not have to rely on your landlord or risk failing to comply with the renewal procedure.<\/span><\/p>\n\n<a href=\"#content-next\"\n   class=\"block p-4 mt-10 text-xl font-bold text-center text-white no-underline bg-gray-800 rounded-t-xl\">\n    Continue reading this article below the form\n    <i class=\"text-xl fa-regular fa-arrow-down\"><\/i>\n<\/a>\n<div class=\"px-6 pt-10 pb-12 mb-10 text-center bg-gray-100 rounded-b-xl sm:px-12 test\">\n    <div class=\"mb-8 text-2xl font-bold text-orange\">\n        Need legal advice?\n        <br>\n        <span class=\"text-lg not-prose\">\n                            Call <a href=\"tel:+64800005570\" class=\"not-prose\">0800 005 570<\/a> for urgent assistance.\n                <br>\n                Otherwise, complete this form, and we will contact you within one business day.\n                    <\/span>\n    <\/div>\n\n    \n\n<div class=\"not-prose flex justify-center text-left gform_input_bg_white    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To claim that your lease was renewed by implication, you will have to point to evidence that demonstrates that both you and your landlord intended to renew your lease. This evidence may be:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">written correspondence between you and your landlord about renewing your lease;&nbsp;<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">the fact that you remained in your premises without renewing your lease and your landlord allowed you to do so; or<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">ongoing payments of rent to your landlord.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400\">However, if you decide to not renew your lease, it is crucial that you make this fact clear to your landlord. Your landlord could also argue that your lease was renewed by implication. If they are successful, your business will be committed to a new lease that you can only terminate through mutual agreement with your landlord.<\/span><\/p>\n<h2><span style=\"font-weight: 400\">Statutory Tenancy<\/span><\/h2>\n<p><span style=\"font-weight: 400\">If you do not exercise your right of renewal, your lease will become a statutory tenancy. A <\/span><span style=\"font-weight: 400\">statutory tenancy is another term for a month-to-month lease. Unlike a normal lease, you can terminate a statutory tenancy at any time by providing your landlord with a 20 days written notice. You may wish to not exercise your right of renewal to acquire the flexibility and freedom that accompanies statutory tenancies.&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400\">However, if you do wish to maintain the security that accompanies longer-term leases, it is best to abide by the specified procedure and renew your lease.<\/span><\/p>\n<h2><span style=\"font-weight: 400\">Key Takeaways<\/span><\/h2>\n<p><span style=\"font-weight: 400\">A right of renewal provides commercial tenants with the option to enter into a new lease with their landlord when their current tenancy is due to expire. If you do not exercise your right of renewal:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">you can seek relief from the court to renew your lease;<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">you can argue that your lease was renewed by implication; or<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">your lease will become a statutory tenancy.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400\">Regardless of whether you wish to renew your lease or allow it to become a statutory tenancy, it is crucial that you follow the correct process to achieve your intended outcome.&nbsp;<\/span><span style=\"font-weight: 400\">If you need assistance with exercising your right of renewal, contact <\/span><a href=\"https:\/\/legalvision.co.nz\/leasing-lawyers-lp\"><span style=\"font-weight: 400\">LegalVision&#8217;s property and leasing lawyers<\/span><\/a><span style=\"font-weight: 400\"> on <\/span><span style=\"font-weight: 400\">0800 005 570 or fill out the form on this page.<\/span><\/p>\n<h2><span style=\"font-weight: 400\">Frequently Asked Questions<\/span><\/h2>\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1614900152902\"><strong class=\"schema-faq-question\"><strong>What is a right of renewal?<\/strong><\/strong> <p class=\"schema-faq-answer\">A right of renewal allows a commercial tenant to enter into a new lease with their landlord when their current lease is due to expire.\u00a0<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1614900141426\"><strong class=\"schema-faq-question\"><strong>Is renewal of lease a right?<\/strong><\/strong> <p class=\"schema-faq-answer\">Most commercial tenants have a right to renew their lease. However, if there is no right of renewal clause in a commercial lease, that tenant will not have a right to renew their lease.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1614900132197\"><strong class=\"schema-faq-question\"><strong>Can a landlord choose to not renew a lease?<\/strong><\/strong> <p class=\"schema-faq-answer\">If you follow the prescribed procedure for renewing your lease, and fulfill the pre-conditions, your landlord must renew your lease.\u00a0<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1614900113121\"><strong class=\"schema-faq-question\"><strong>What happens if a commercial lease is not renewed?\u00a0<\/strong><\/strong> <p class=\"schema-faq-answer\">If a commercial lease is not renewed, the lease will become a month-to-month lease. To avoid this outcome, commercial tenants can apply to the court for relief, or argue that their lease was renewed by implication.\u00a0<\/p> <\/div> <\/div>\n","protected":false},"excerpt":{"rendered":"<p>As a commercial tenant, a longer term lease can be extremely beneficial. It provides your business with security as to your location and helps in maintaining a strong, local customer base. However, due to an array of reasons, you may not renew your lease by exercising your right of renewal. This article will outline what:<a href=\"https:\/\/legalvision.co.nz\/property-and-leasing\/exercise-right-of-renewal\/\">Continue reading <span class=\"sr-only\">&#8220;What Happens if I Do Not Exercise my Right of Renewal in NZ?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13234,"featured_media":201644,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[11],"tags":[25,91,643,644],"class_list":["post-203225","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-property-and-leasing","tag-small-business","tag-commercial-lease","tag-right-of-renewal","tag-statutory-tenancy"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What Happens if I Do Not Exercise My Right of Renewal? | LegalVision<\/title>\n<meta name=\"description\" content=\"If you are a commercial tenant, you may not wish to exercise your right of renewal. 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However, if there is no right of renewal clause in a commercial lease, that tenant will not have a right to renew their lease.","inLanguage":"en-NZ"},"inLanguage":"en-NZ"},{"@type":"Question","@id":"https:\/\/legalvision.co.nz\/property-and-leasing\/exercise-right-of-renewal\/#faq-question-1614900132197","name":"Can a landlord choose to not renew a lease?","acceptedAnswer":{"@type":"Answer","text":"If you follow the prescribed procedure for renewing your lease, and fulfill the pre-conditions, your landlord must renew your lease.\u00a0","inLanguage":"en-NZ"},"inLanguage":"en-NZ"},{"@type":"Question","@id":"https:\/\/legalvision.co.nz\/property-and-leasing\/exercise-right-of-renewal\/#faq-question-1614900113121","name":"What happens if a commercial lease is not renewed?\u00a0","acceptedAnswer":{"@type":"Answer","text":"If a commercial lease is not renewed, the lease will become a month-to-month lease. 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